» College Financing Advices » PLUS Loans Overview

PLUS Loans Overview

In order to get financing of for the education of your child you can apply for a PLUS Loan (also known as Parent PLUS Loan). This type of loan is available through the various funding programs of the US Department of Education. The amount of the loan depends on the costs of attendance and can reach really high levels.

Qualifying for a PLUS Loan

In order to qualify for a federally-sponsored PLUS loan the following requirements should be met:

  • The student should be dependent undergraduate. Parents of independent students are not eligible for the Parent PLUS Loan.
  • The student should be at least part-time.
  • You should be a citizen of the US or eligible non-citizen.
  • A credit check will also be required in order to get approved for a Parent PLUS Loan.

As previously mentioned, PLUS Loans are intended for parents seeking financing for the education of their children. Thus, the application procedures should be completed by the parent of the student. The application basics can be clarified for you by the financial aid office.

PLUS Loans Advantages

If you get approved for a PLUS Loan you will be able to enjoy the following features:

  • You can enjoy higher loan amounts.
  • There will be no prepayment penalty if you want to repay the loan before the due date.
  • The interest of the PLUS Loans may be tax-deductible.
  • You can benefit from flexible repayment options, among which you can find consolidation.
  • There will be no income or collateral requirements.

PLUS Loans Disadvantages

Plus Loans are not deprived of shortcomings.

  • In case the student receives a scholarship, the amount of money you can borrow is decreased.
  • During the application process the parents of the student should go through a credit check.
  • A fee (no more than 4%) may be incurred.
  • The PLUS Loan interest is relatively high - if you have taken the loan after July 2006, your APR will be 8.5%.
  • The interest you incur in the loan cannot be subsidized.
  • No grace period is provided.
  • The making of payments should be started after sixty days you have taken the loan.

The particular Plus Loans terms that will apply to you will vary from one lender to another.

PLUS Loan Amount

How much you will get by a PLUS Loan depends on:

  • The cost of attendance
  • Additional resources you can obtain

When you apply for the loan you can include such costs as books, supplies and others. This means that you can obtain more than the tuition fee.

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